Samsung to newly invest up to 8.5 tril. in NAND chips

'Investment plan has no relation to President Moon's repeated calls to bring Korean firms back home'

By Baek Byung-yeul

Samsung Electronics plans to invest 8.5 trillion won in its advanced flash memory chip plant in Pyeongtaek, Gyeonggi Province, as the virus-induced push to the digital economy should see increased demand for corporate servers.

The world's largest memory chip manufacturer said in a statement that its decision to construct cutting-edge V-NAND flash memory chip-producing lines at its Pyeongtaek plant is aimed at responding to increasing demand for products utilizing artificial intelligence (AI), internet of things (IoT) and fifth-generation (5G) networks, which require heavy consumption of flash memory chips. Samsung plans to mass-produce NAND flash chips at the Pyongtaek factory by late 2021.

The investment announcement came 11 days after the company said it would build a new foundry line in the Pyeongtaek plant on May 21.

Prior to COVID-19, the digital transition was already well on its way thanks to strong growth in cloud computing services, e-commerce and other digital technologies. This trend has been accelerating with video streaming led by hyperscale data center users like Netflix and YouTube surging, creating immense demand for all relevant supporting infrastructure including corporate flash chips.

Samsung also mentioned the decision was in accordance with the new trend as people are unlikely to let go of the benefits of the digital economy after they have been practically forced to make the transition because of the spread of COVID-19. More precisely, the virus is accelerating corporations' transition to digital as social distancing measures encourage virtual meetings in lieu of in-person meetings. Also, the virus has changed the consumption patterns of consumers.

Even though Samsung faces a challenging business environment, the move is to reinforce its leading position in the memory chip market and widen the gap with its competitors, the company added.

But Samsung downplayed the significance of its investment by saying the investment plan has no relation to President Moon Jae-in's repeated calls to bring manufacturing companies back to South Korean soil. President Moon said earlier he will be aggressive in persuading South Korean manufacturing companies to return home and to win more foreign direct investment.

Samsung operates NAND flash chip manufacturing plants in Hwaseong, Pyeongtaek and Xi'an in China. Samsung Vice Chairman Lee Jae-yong recently visited the Chinese city of Xian as the company is in the process of constructing a second NAND chip line there. Lee's visit raised expectations that Samsung would focus on producing NAND chips in China and advanced DRAM chips in South Korea.

“The preemptive investment in the NAND flash memory chip line shows that Samsung is determined to keep its promise to tighten its grip on the memory chip market even though the business environment surrounding the tech giant is not good,” an industry official close to the matter said.

“The new investment reaffirms our commitment to sustain undisputed leadership in memory technologies, even in uncertain times,” Choi Cheol, executive vice president of memory global sales and marketing at Samsung, said in the statement. “We will continue to serve the market with the most optimized solutions available, while contributing to growth of the overall IT industry and the economy in general.”